As expected, the Greek parliament passed the latest austerity measures this morning by a narrow margin, with 155 votes in favor of the measures, 138 opposed, and 6 abstentions. The measures were a requirement of the EU and IMF for the government to receive $17 billion in aid, necessary to prevent Greek default on debt.
The austerity measures have been hotly protested in Athens, with protests erupting into riots, with rioters destroying public property, lighting fires, and throwing rocks and Molotov cocktails. While the measures were ultimately necessary in preventing complete economic collapse in Greece, as well as protecting the EU and markets around the world affected by Greek investments, they haven’t been very popular in Greece where citizens stand to lose thousands of jobs and experience huge cuts in pay at government jobs.
It is a significant and solemn occasion for members of Greece’s government to vote in favor of eliminating jobs and public spending while increasing taxes for citizens already struggling to get by in a weak economy. Last year the government instituted austerity measures that also cut thousands of government jobs and cut salaries in the public sector, leaving many households with only a fraction of their previous incomes.
Markets and futures were already up this morning on expectations the measures would pass, and continue to rise. While the vote was a step in the right direction for Greece’s economy and for the world, no one’s in the clear just yet. The EU and IMF still have to vote to decide whether Greece will receive $17 billion in aid, though that seems likely. But there’s no guarantee that the money will prevent Greek default, and it may be too late for other fragile economies like those of Ireland, Portugal, and Italy who have been hurt by the devaluation of the euro and investments in Greek banks (NYSE:NBG) and treasuries.
Improve Your 2011 Financial Health: Join the winning team of stock pickers with Wall St. Cheat Sheet’s acclaimed premium newsletter >>